Moneycontrol Bureau
Credit Suisse has downgraded Just Dial to neutral from outperform with a reduced target price of Rs Rs 950 from Rs 1000. The brokerage is not very upbeat on the stock even though it has has more than doubled from its recent lows.
Credit Suisse feels that maintaining pace of paid listing growth, particularly outside the top-ten cities, and competition from vertical players and others are challenges for Just Dial.
"In the recent months, management's focus has shifted towards JD Omni from Search Plus. JD Omni represents a completely different business model for Just Dial, and the capability to cope with this is yet to be tested. We cautiously build in revenue of Rs 52 crore/Rs 72 crore for FY17-FY18," the report said.
It is also concerned that further slowdown in core and additional investments in sales are key downside risks. According to Credit Suisse, rather than Search Plus driving a separate revenue stream, it would work as an add-on to Just Dial's local search offerings.
It adds that absence of Search Plus ad-spends leads to FY16 earnings per share (EPS) upgrade. FY17-18 EPS changes reflect higher headcount spend, partly offset by lower ad-spends.
Shares of the Just Dial fell 2 percent. At 09:52 hrs Just Dial was quoting at Rs 866.50, down Rs 16.15, or 1.83 percent on the BSE.
Posted by Nasrin Sultana Follow @NasrinzStory
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